Wednesday, 24 July 2024

BCA’s Setiaatmadja bolsters CASA to establish APAC’s strongest funding base

5 min read

Jahja Setiaatmadja, TAB Global’s 2023 CEO of the Year in Asia Pacific, leveraged the bank’s strong deposit base, adopted new technologies for customer service and prioritised stable funding through retail channels for financial resilience and record profit of $2.9 billion in 2022

Jahja Setiaatmadja of Bank Central Asia (BCA) was awarded CEO of the Year in Asia Pacific, while BCA was concurrently recognised as Bank of the Year in Asia Pacific at the Leadership Achievement Awards 2023 presented by TAB Global. The event was held in conjunction with The Asian Banker Future of Finance Summit in Bangkok that took place from 12 to 15 June.

Leveraged the bank’s strong deposit base

As the bank with the highest market capitalisation in Indonesia, BCA’s growth mirrors the Indonesian economy—a fact well understood by Setiaatmadja, president director of the bank. For many years, Indonesia’s gross domestic product growth was maintained at 5%. It was not the fastest-growing economy, but it was stable.

BCA’s success was predicated on a strong deposit base, good customer relationships, high shareholder satisfaction thanks to Setiaatmadja’s interim dividend policy, high capitalisation and share price. The bank’s adoption of new technologies improved customer service, which bolstered high current and savings account (CASA) ratios.

The bank’s strategic focus on stable funding through retail channels led to 5.7% year-on-year growth in CASA, accounting for 81.2% of total third-party funds. This emphasis on sticky-retail CASA provided a reliable and low-cost source of funds, supporting financial resilience and profitability with a healthy 65% loan-to-deposit ratio.

Under Setiaatmadja’s leadership, the bank prioritised stability and transformed its deposit accounts into transaction accounts. He adopted the use of new technologies to improve customer experience; as a result, only 0.3% of transactions take place at the bank’s branches.

In his acceptance speech, Setiaatmadja remarked: “We have been able to convert the paradigm of the customer from savings accounts to transactional accounts. They put their money in our bank—it’s about 36 million accounts now—not because of the interest but for the convenience of digital transactions.”

Highest capitalisation in Asia Pacific

The award winner is selected based on bank financials in 2022. Setiaatmadja’s initiatives were well received by shareholders. The high capitalisation of the bank’s shares and interim dividends yielded good return-on-investments and strengthened relationships with long-term investors.

BCA is not only the largest listed company in the country but also the largest bank in Southeast Asia by market capitalisation. With Setiaatmadja at the helm, BCA achieved strong financial ratios by international standards. A cost-to-income ratio of 32.5%, and efficient operational management contributed to a record profit growth of 29.6% to $2.9 billion.

The bank maintained a net interest margin of 5.9%, a low non-performing loan ratio of 1.8%, and a robust capital adequacy ratio of 28.9%. Its market capitalisation grew at a compound annual rate of over 44% in the past two years, reaching $79.8 billion by April 2023.

Online and offline channels enhance customer experience and satisfaction—the bank’s contact centre handles a high volume of approximately 110,000 contacts per day, and aims to replicate this level of service through its online channels.

Setiaatmadja added: “We are not only profiling the digital but also the call centres. Our customers consist of those who are 17 to 18 years old, and up to those who are 95 to 100 years old. For the old and senior people, it’s very hard to use the digital [services] 100 percent. They need information and education to help them. And our call centres can help them 24 hours a day. There are 110,000 calls per day that we have to service and we have 140 million transactions a day now.”

BCA has actively supported sustainable initiatives and businesses. The bank’s sustainable loan portfolio experienced significant growth of 14.9% to $12.3 billion, constituting 25.4% of the total portfolio in 2022. This expansion reflects BCA’s commitment to promoting sustainability and environmentally responsible financing practices.

The CEO of the Year in Asia Pacific Award recognises the outstanding achievements of top executives, the highest accolade for individual achievements in the financial industry in Asia Pacific. The programme is predicated on the belief that leadership is demonstrated by the ability to execute a well-communicated vision, inspire a strong management team, and overcome specific adversities to deliver strong and sustainable financial and business performance.

This highly coveted award is one of the most difficult and exclusive recognition programmes in the industry due to its rigorous evaluation process. Read more about the Evaluation Criteria and Leadership Achievement Awards.

Click here to view the full list of Leadership Achievement Awards 2023 winners

Watch Jahja Setiaatmadja's exclusive interview on what makes BCA the highest capitalised bank in Southeast Asia here.

About The Asian Banker

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For further information:

Foo Boon Ping Chris Kapfer
President and Managing Editor Research Director

Institution: Bank Central Asia
People: Jahja Setiaatmadja
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